Securities Fraud Enforcement Act of 1988

The Securities and Exchange Act of 1934, a.k.a. the '34 Act, made it formally illegal to use inside information to trade stocks.

Amazingly, that used to not be illegal. Or at least not explicitly so. And it wasn’t enforced. Investing was a clubby white man’s insider’s gig. And the boyz took care of the boyz. Since people could make a lot of money with insider information and thought they wouldn't get caught...like, who's going to know you overheard the CEO of Big Company talking about a merger in a Denny's washroom?

Some folks pretty much ignored the law. The 1988 law was basically Congress saying, "You guys! We're really serious about this." This new legislation added some hefty penalties if you get caught. People still trade on insider information though, so...yeah. Some were just born to be bad.